Yieldex CEO Talks About Jumping Into The Automated Guaranteed Pool

Earlier this year, Yieldex – mostly known as a yield-management, forecasting and pricing tool for the largest publishers – expanded its focus with an automated guaranteed product. About a third of Yieldex’s customers use it.

eMarketer has predicted programmatic direct will grow from $800 million this year to $8.57 billion by 2016. Two weeks ago, Rubicon bought two smaller players in the space, iSocket and Shiny Ads, and rumors abound that Google is months away from entering the market itself.

CEO Andy Nibley has been with 8-year-old Yieldex for four years, over which time it’s tripled its number of employees to 70, he said.

“We’ve been growing revenue an average of 40% a year for the past several years. It’s a software-as-a-service business, so we have 65-70% in gross margins, which is nice,” he explained. “We’ve broken into profitability last year, a year and a half ahead of schedule.”

Nibley talked to AdExchanger.

ADEXCHANGER: If you’re growing revenue 40% a year, is that going to be from gaining market share among the top publishers, or something else?

ANDY NIBLEY: We see the market as the comScore 200. We have 50 now, including The New York Times, Wall Street Journal, ESPN, CNN, NBC, CBS, Hearst, Scripps. There’s still a lot of room to grow there.

We also have new products and upsells and our new automated guaranteed product offering.

How does automated guaranteed work for Yieldex?

It’s kind of a logical evolution of our product line. If you think of other industries, like the financial services or travel, you start with a lot of data, and then you build an analytics capability on top of that so you can analyze the data and see what’s happening.

Ultimately with those analytics you can see the history, and you can see the future, and you can begin to forecast what’s going to happen in the future. That’s what we’ve done in the ad tech so far. The last part is transactional. Now that you have all this intelligence, how do you transact based on that knowledge? That’s automated guaranteed.

What’s different about Yieldex’s automated guaranteed product?

Two competitive advantages we have over anyone else in that space is, one, we have this blue-chip list of the biggest publishers who have the best inventory that the buy side wants to purchase.

Two, no one else has the accurate forecasting and analytics layer that we have. Buyers want to know they’re getting a placement on that premium publisher’s site that they can count on, that no one is going to outbid them, that it’s a locked-in deal and guaranteed.

How do other competitors get around that issue of forecasting availability?

They don’t. And we know what we have is so valuable because they’re always asking if they can have our forecasting. Why would we give them something that we’ve spent tens of millions of dollars developing?

Is your forecasting based on historical data, or is it more predictive analytics?

Both. We take in five terabytes of data a night and 130 billion impressions a month. We take all of the data in from ad servers, order management systems, DMPs, SSPs. Then we allow the publisher to look back historically, as far as they want to go back, and look at their sell-through rate, eCPM, slice and dice however they want.

Then they can look forward 15-18 months and see what is likely to happen with the inventory, how much they’re likely to have to sell, and how many available impressions are they going to have for this particular product at this date in the future.

We have patented algorithms that figure that out, and we emulate the ad server. We know how ad servers work and how they serve up ads. Our chief strategy officer is arguably the guy who invented the ad server. He was at NetGravity, which was bought by DoubleClick and bought by Google.

What’s on your product road map?

Cross-channel optimization is big, digital video is big and continuing to build out our automated guaranteed product line. Those are the three major ones.

Businesswide, it’s expansion into Europe. We think Europe is an enormous market, and we have five clients there so far. We’ve only just started in Asia. We built the business in the states brick by brick, and we’ll do the same there. By all indications, there’s tremendous opportunity.